OREANDA-NEWS. March 09, 2012. According to the summary of PwC’s 15th Annual Global CEO looks at the key findings in the metals sector, 58% of metals CEOs expect the global economy to decline over the next 12 months, compared to 48% of the overall sample. 30% of metals CEOs are not very confident of being able to generate higher revenues over the next 12 months (versus 12 % of the total sample), reported the press-centre of PwC.

John Campbell, metals and mining leader, PwC Russia, commented:

“CEOs are adapting how they go to market, reconfiguring processes and at times entire operating models. They are also addressing risks that greater integration can amplify and are focused on making talent more strategic to pursue market opportunities”.

Cost-cutting remains a top priority for metals CEOs. Many metals companies have seen their liquidity improve. And some are clearly considering where to spend the extra cash: 70% of metals CEOs expect to revise their capital spending this year.

Metals CEOs are more worried about protectionism than their peers in other industries (60% versus 44% of the total sample).

The US and Germany top the list of countries they regard as most important for their companies’ future growth, although China and India come close behind. Many CEOs are pinning their hopes on the emerging markets.

Natural resources is the area in which metals CEOs are investing more heavily is. There are a few strategically important metals – such as rare earth elements – which are mined almost exclusively in China.

Metals CEOs are cautious about using mergers and acquisitions (M&A) to expand. Only 13% of metals CEOs have completed a cross-border deal in the past 12 months, and only 18% plan to do so in the coming 12 months, less than the overall average.

Nearly three out of four metals CEOs plan to change their company’s R&D and innovation capacity in 2012, and 23% intend to make ‘major’ changes.

Mr.Kalyani, Chairman and Managing Director Bharat Forge Ltd.:

“You can’t change an approach to innovation in one year. To build innovation capabilities you need a minimum of about 15 years. It will take us another five to seven years to become as innovative as companies in the West. But we will get there for sure.”

A growing number of metals companies are also forming research alliances. One such instance is the Ultra-Low CO2 Steelmaking consortium – better known as ULCOS – a group of 48 European organisations that have banded together to research ways of radically reducing the emissions from steel production. And some companies – Bharat Forge – among them – are linking up with academic institutions.

An astounding 70% of metals CEOs are nervous about major currency fluctuations, and 45% of them are extremely worried. Some of this anxiety may be linked to concerns about Europe’s sovereign debt crisis, which nearly two-thirds of metals CEOs say has directly affected their companies. High-impact external events are causing threats as well. More than a quarter of metals CEOs (28%) told us the earthquake and nuclear crisis in Japan had directly affected their companies.

Metals CEOs are also much more worried about energy costs than other CEOs (75% versus 46%).

Talent management is much lower on the list of areas metals CEOs want to change this year.  Only 43% are concerned that a shortage of key skills could jeopardize their company’s growth (versus 53% of the total sample). And only 53% want to spend more time developing the leadership and talent pipeline (versus 68%). Another big concern for metals CEOs is filling key spots abroad. At present, 35% transfer senior managers from their headquarters country to newer markets when the need arises.